**In this forum thread I would like to familiarize traders with a trading method based on correlation of currency pairs to hear the views of traders and learn what options trading based on the correlation used.**

the Theme of the method is not new and information on the Internet enough, as there is a different interpretation of the ways of trading used to analyze trading tools and indicators. Opinions about the system, both positive and negative. So I will present this material in Konteks, as I understand it all, and on what basis to carry out his trade. The idea of trading this way is not mine, but I think deserves attention for its progress in life.

**Correlation**(from lat.

**correlatio**)

**correlation**— relationship between two or more random variables or values which is possible with some acceptable degree of accuracy considered as such. The gist of it is that changing the value of one variable is accompanied by systematic changes in the values of another. When correlation calculation is trying to determine whether there is a statistically relationship between two or more variables in one or more samples. The term correlation is found in our daily life too rarely, for example, the relationship between unemployment and the number of criminal offences, the relationship between height and weight of people, between experience and labor productivity, etc.

a Measure of the correlation of two random variables is

**correlation coefficient**, which, in turn, can be both positive and negative.

**correlation Coefficient**takes values from -1 to +1. A positive value of the correlation coefficient indicates a positive Association, a negative the opposite. The larger the module the calculation result is, the stronger the magnitude of influence each other. A value of zero indicates no correlation, a value less than 0.5 indicates a weak, but otherwise - on a pronounced relationship.

<font face="Verdana]<font face="Verdana]In my case, to determine the correlation between the two instruments, taken

**the correlation coefficient of Pearson.**the Calculation of this factor is implemented in the table.

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[/color]the table is divided into 2 units: direct and indirect rates (depending on the location of the U.S. dollar, in the numerator or the denominator).

**We will be interested in the currencies over a long period of time between show a positive correlation, that occurs between the period when they will move the mirror (the sample is presented in the table).**

the Figures in the table characterize the degree of similarity of one currency against another.

As already mentioned earlier, about the correlation coefficient, it takes values from "1" to "-1".

If the index is equal to:

- "1" or close to that value - this means that the new currency by move relatively synchronously;

- about the "0" means the currency have no relationship;

- "-1" or so - currencies moving mirror (asynchronous).

Quotes of the same type, most of them have correlation relationship with each other, if one quote increases, then the second (related) is also growing and Vice versa. Sometimes between currency pairs there is a phenomenon of "anticorrelation" - one currency begins to rise, and the other, which showed for a long period of time a positive correlation with the first falls. The phenomenon of "anticorrelation" is usually due to the release of news on any one of the currencies, the market response (due to different time zones), etc., Two currencies that had previously moved synchronously start to move in different directions (one increases, the other falls), but the phenomenon of "anticorrelation" can not last long,

**it was during this period we have the opportunity to make a profit.**

Market entryis the simultaneous placing of pairs of transactions in two currencies, i.e. go into a kind of hedge, we call it the "bundle". In conjunction one currency sell another buy. To determine which currency pair to sell and which to buy, you can use the different indicators. In my trading I use 2 indicators, and one of them determine the direction of setting the transactions in the bundle.

Market entry

The first is the analogue available to all Internet resources indicator Multiinstrument: